Stock Market Today: Indexes Retreat as Investors Reassess Rate Cut Expectations
Major Indexes Poised for Lower Open on October 7, 2024
As the trading week kicks off on Monday, October 7, 2024, the U.S. stock market is showing signs of retreat following last week’s rally. Futures tied to major indexes are pointing to a lower open, with technology stocks leading the decline in premarket trading.
S&P 500 futures are down 0.4%, Dow Jones Industrial Average futures have slipped 0.4%, and Nasdaq 100 futures are off by 0.5%. This pullback comes after a strong performance last week, which saw the Dow reach an all-time closing high on Friday.
Tech Giants Face Pressure
Mega-cap technology stocks are experiencing downward pressure in premarket trading. Apple (AAPL) and Amazon (AMZN) are both down more than 1%, with Apple facing an additional challenge after Jefferies downgraded the stock to hold from buy. Other tech heavyweights, including Nvidia (NVDA), Microsoft (MSFT), Meta Platforms (META), and Alphabet (GOOGL), are also showing weakness.
Investors Reassess Rate Cut Expectations
The market’s retreat can be attributed to investors reevaluating their expectations for interest rate cuts following Friday’s better-than-expected jobs report. The robust employment data has led to a shift in sentiment regarding the Federal Reserve’s monetary policy outlook.
Traders have now scaled back their bets on aggressive rate cuts. The CME FedWatch Tool indicates an 88% chance of a 0.25% rate cut in November, down from previous expectations of a more substantial 0.50% cut. This adjustment in rate cut expectations is putting pressure on stocks that have rallied on the prospect of easier monetary policy.
Treasury Yields and Oil Prices on the Rise
The yield on the 10-year Treasury note has climbed above 4% for the first time in two months, reflecting the market’s reassessment of the interest rate environment. Meanwhile, crude oil futures are up about 1.5%, extending last week’s rally amid growing concerns about potential disruptions to oil production due to conflicts in the Middle East.
Upcoming Market Events and Economic Data
Investors are now turning their attention to key economic releases scheduled for this week:
1. Federal Reserve meeting minutes (Wednesday)
2. Consumer Price Index (CPI) report (Thursday)
These reports will be closely watched for insights into the Fed’s monetary policy stance and inflationary pressures in the economy.
Earnings Season Kicks Off
The third-quarter earnings season is set to begin, with several major companies reporting this week:
– PepsiCo (PEP) on Thursday
– JPMorgan Chase (JPM), Wells Fargo (WFC), and BlackRock (BLK) on Friday
Goldman Sachs has raised its target for the S&P 500, citing expectations of higher margin growth for corporate companies.
Notable Stock Movements
– Pfizer (PFE) shares rose 2.6% in premarket trading following reports that activist investor Starboard Value has taken a $1 billion stake in the pharmaceutical giant.
– Nintendo’s stock climbed almost 5% after reports that Saudi Arabia’s sovereign wealth fund is considering increasing its stake in the company.
Global Market Performance
Asian markets showed strength on Monday, with Japan’s Nikkei 225 rising 1.8% and Hong Kong’s Hang Seng index climbing 1.4%. The positive performance in these markets contrasts with the cautious sentiment in U.S. futures.
As investors navigate this complex market environment, they will be closely monitoring economic data, corporate earnings, and geopolitical developments for cues on market direction in the coming days and weeks.
